According to the equation of exchange, if total output and velocity are constant, a 20 percent increase in the money supply leads to

a.    a 20 percent decrease in the price level.
b.    less than a 20 percent decrease in the price level.
c.    less than a 20 percent increase in the price level.
d.    a 20 percent increase in price level.

ANSWER

d.    a 20 percent increase in price level.